Economic survey of the Netherlands 2008: Increasing working hours: Helping reconcile work and family

 

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The following OECD assessment and recommendations summarise chapter 4 of the Economic survey of the Netherlands published on 31 January 2008.

 

Contents                                                                                                                   

Women work mostly part-time

About two-thirds of Dutch working women opt for part-time jobs, bringing down the country’s average working time to one of the lowest levels in the OECD. While individual preferences may play a role, international evidence strongly links the incidence of part-time work to taxation and childcare. In the Netherlands, full-time female participation is hampered by a high marginal effective tax burden on second earners, reflecting the withdrawal of social benefits conditioned on family income. The government should continue to reduce the marginal effective tax rate faced by second earners by reducing further the rate at which housing and child benefits are tapering off. Moreover, certain work-related entitlements and tax credits could be conditioned on the number of hours worked, as in some other OECD countries. Recent government decisions have stimulated the provision of childcare services and helped reduce their cost, making it easier for parents to work longer hours. But not all obstacles to the supply of childcare services have been removed. The government should consider designating childcare as an essential facility in the zoning law in order to facilitate the deployment of services. A new law requires schools to arrange the provision of care before and after school hours, by either supplying care themselves or by acting as a matchmaker between external providers and parents. In addition, the government should require that schools take responsibility for the provision of childcare services during agreed opening hours, at least as providers of last resort. As well, school premises should be available to external childcare providers outside normal school hours.

 

Incidence of female part-time employment(1)

1. Share of female unemployment working part-time.
Source: OECD, Average hours worked,2006.

 

Tax measures continue to discourage low-skilled women from working

The aggregate female participation rate is relatively high, but low-skilled married females tend to remain at the margin of the labour market. This group is often willing to work and the service sector has a strong demand for their labour, but the tax system discourages their participation. Each family member is taxed separately, independently of the income of other household members, making the tax system in principle neutral with respect to marriage. Nonetheless, the tax system contains elements based on joint taxation, in particular the right for non working partners in single-earner couples to transfer their general tax credit (about € 2 000) to the primary earner. Such an element of joint taxation scores high in terms of equity, because it takes into account the fact that the family is the consumption unit and applies the progressivity of the tax system to family incomes. But it scores low in terms of efficiency because it discourages the labour market participation of the secondary earner. On balance, the government has decided to phase out the transferability of the tax credit (completing the individualisation of the tax system) starting in 2009, but over 15 years and with exemptions for mothers with children aged five and under and those born before 1972. Estimates by the Netherlands Bureau for Economic Policy Analysis indicate that the full phase-out would have a significant impact on female participation. To get this benefit at an early stage, the transferability could be eliminated more rapidly and without exemptions.

 

How to obtain this publication                                                                               

The Policy Brief (pdf format) can be downloaded in English. It contains the OECD assessment and recommendations.The complete edition of the Economic survey of the Netherlands 2008 is available from:

Additional information                                                                                             

 

For further information please contact the Netherlands Desk at the OECD Economics Department at eco.survey@oecd.org.  The OECD Secretariat's report was prepared by Jens Hoj, Ekkehard Ernst and Jasper Kieft under the supervision of Patrick Lenain. Research assistance was provided by Laure Meuro.

 

 

 

 

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